2007 (1) TMI 44 - AT - Customs

Refund Revenue contended that once the unit is de-bonded there is no provision for re-bonding and accordingly refund of duty not provide Commissioner after considering the detail rejected the revenue contention and allow the refund

Summary

Issues:
1. Refund of duty paid by a 100% EOU.
2. Interpretation of de-bonding and re-bonding provisions.
3. Compliance with EXIM policy for exiting EOU scheme.

Analysis:

Issue 1: Refund of duty paid by a 100% EOU
The appellant, a 100% EOU, paid duty on capital goods when they intended to withdraw from the EOU scheme due to adverse market conditions. Subsequently, they decided to continue operating as a 100% EOU. The Dy. Commissioner initially allowed the refund claim, considering the goods were not actually removed from the EOU. However, the Revenue contested this decision, arguing against re-bonding provisions. The Commissioner (A) upheld the Revenue's appeal, leading to the appellant's grievance over the order.

Issue 2: Interpretation of de-bonding and re-bonding provisions
The key contention revolved around the interpretation of de-bonding and re-bonding provisions. The appellant's consultant argued that despite obtaining de-bonding permission, the unit did not complete the exit formalities as per the EXIM policy, continuing to function as a 100% EOU. On the other hand, the JDR emphasized that once de-bonding permission is granted, there is no provision for re-bonding, suggesting that the refund was not justified.

Issue 3: Compliance with EXIM policy for exiting EOU scheme
The Tribunal carefully examined the records and highlighted the importance of complying with the EXIM policy for exiting the EOU scheme. Per the policy, a unit exits the EOU scheme only upon completion of specific formalities, including obtaining a final exit order from the Development Commissioner. In this case, the necessary formalities had not been fulfilled, and the de-bonding permission had lapsed. The Development Commissioner confirmed the unit's continued operation as a 100% EOU. Consequently, the Tribunal ruled in favor of the appellant, setting aside the Order-in-Appeal and allowing the refund of duty paid on capital goods.

This detailed analysis of the judgment addresses the issues surrounding the refund claim, the interpretation of de-bonding and re-bonding provisions, and the compliance with the EXIM policy for exiting the EOU scheme, providing a comprehensive understanding of the Tribunal's decision.